Five Ways to Prepare for Your Next Exam Without a Lot of Stress

Just because consumer financial protection flexibilities are a thing of the past does not mean your future should be filled with stress.

A few effects of the COVID-19 global pandemic remain for credit unions, such as offsite exams and a larger remote workforce, but some aspects of running a credit union are getting back to normal. One of those aspects is consumer financial protection and the expectation that credit unions fully comply with regulations.

Effective April 1, 2021, the Consumer Financial Protection Bureau rescinded each of its policy statements issued in 2020 that provided temporary flexibilities related to mortgages, appraisals, credit reporting, credit cards, and prepaid cards.

Now that a “best efforts” approach to consumer regulatory compliance will no longer meet examiner expectations, here are a few ways you can prepare for your next exam without a lot of stress.

1. Designate a point person. Each year NCUA publishes a list of their Supervisory Priorities, including those related to consumer financial protection ( NCUA Letter 21-CU-02). Designate someone who understands your compliance efforts regarding these priorities to gather information and communicate with applicable staff, management, board, and regulators. Information gathered should highlight policies and procedures implemented/modified, potential issues identified, corrective actions taken, training provided. and any other relevant actions. The key is having someone responsible for documenting your efforts.
2. Review past exams and member complaints. Prior identified weaknesses related to consumer protection will usually receive a higher level of review. Additionally, complaints can uncover a variety of consumer compliance violations as well as policy, procedure, and training weaknesses. Be sure you have addressed and documented your efforts to take corrective action when necessary.
3. Get your electronic life in order. With many examinations occurring offsite, getting your electronic life in order is a must for 2021 and beyond. A larger remote workforce and operational disruption of 2020 has placed pressure on credit unions to ensure the most up-to-date policies and procedures have been saved to the proper internal network locations and that all applicable staff are referring to them for guidance. It is also important to make sure your credit union has created a workable scanning and storage system for key documents, as this will facilitate the sharing of information for exams.
4. Perform internal control audits regularly. No, you do not need to perform internal control audits using internal human resources. In many cases outsourcing to experts is the best approach. While a full array of internal control audits is ideal, for most credit unions this is not feasible. Not to worry, something is better than nothing. Start with your higher risk items or look to the supervisory priorities for ideas. One hint: make sure all applicable staff have received the training provided for in your policies.
5. Know your risk. The most important aspect of compliance operations today is understanding your regulatory risk. Identify the risks of your products, services, membership, delivery channels, and environment. Define your risk tolerance. Put controls in place to meet your members’ needs, carry an acceptable level of risk, and ensure adequate compliance. Maintaining an updated risk assessment is one of the best ways to show your regulator that you are serious about consumer financial protection.